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White-Collar Crime

Madoff Aide Pleads Guilty, Says ‘It Was All Fake,’ Judge Nixes $2.5M Bond Deal

Posted Aug 11, 2009 5:21 PM CDT
By Martha Neil

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After Frank DiPascali pleaded guilty today to carrying out one of the biggest frauds on Wall Street with the help of unidentified "other people" who put together its fictitious books and investment statements, the plan was for the cooperating witness and longtime aide to convicted $65 billion Ponzi schemer Bernard Madoff to be released on $2.5 million bond.

But U.S. District Judge Richard Sullivan unexpectedly said no to the bond agreement between the prosecution and defense counsel, sending the 52-year-old immediately to jail, reports the New York Times. The 10-count case against him includes charges of falsifying financial records, fraud and money laundering.

Although investors in Madoff's securities firm were led to believe they were buying into a hedge fund, “no purchases or sales of securities were actually taking place in their accounts,” DiPascali said in federal court today in Manhattan. “It was all fake. It was all fictitious. It was wrong, and I knew it was wrong at the time.”

He faces a maximum sentence of 125 years in prison, but is expected to get less due to his cooperation, reports the Wall Street Journal (sub. req). His sentencing is tentatively scheduled for May 2010.

Additional coverage:

Bloomberg: "Ex-Madoff Finance Chief Frank DiPascali Pleads Guilty"

Bloomberg (Jan. 2009): "Madoff’s ‘Street-Smart’ Aide DiPascali Was Investors’ Go-To Guy"

Bloomberg: "Madoff Got Cozy With SEC, Ran Ponzi Scheme on Old IBM"

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